Loan rates should mirror unfinished homes' higher risk, highlight gap

Requiring banks to hold more capital for under-construction loans and less after completion would make their higher risk evident through the resulting interest-rate differential

Rajesh and Seema lived in a rented apartment in Delhi, dreamt of owning a home, and saved diligently towards it. They fell for an irresistible offer for an under-construction flat in Noida: pay 20 per cent now, finance the rest through a bank loan, and pay no interest until possession. It looked like a dream deal until it turned into a nightmare. The project stalled midway; the bank had already released the entire 80 per cent to the builder. Under a tripartite agreement, the builder was to service the loan until handover, but when he defaulted, the fine print shifted